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The accelerating consolidation in the telecom industry will benefit top operators but pose some risk to tower companies given the tenancy, according to a report.

Consolidation in India's telecom industry is set to accelerate which bodes well for top operators, presenting them with an opportunity to outpace the sector growth and improve share and profitability, said a report by CLSA on telecom sector outlook.

"The scaling down/exit of business by smaller mobile operators will place in aggregate about 20 percent of industry cell sites at risk," the report said.

Among the tower companies, GTL Infrastructure, ATC India and Reliance Infratel will be most impacted as over 85 percent of sites at risk are on their towers. Also, it is estimated that about 5 percent of Bharti Infratel and Indus Towers's tenancies could be at risk.

The telecom market is in a phase of consolidation post the entry of Mukesh Ambani-backed Reliance Jio in the sector. Many experts have projected that only three telecom operators apart from a telecom PSU will be left in the market soon.

Vodafone and Idea Cellular are in the process of merging their operations. Anil Ambani-promoted Reliance Communications (RCom) and Aircel,however, called off their merger talks recently citing legal and regulatory delays.

Rcom has a debt of about Rs 46,000 crore and is looking at ways to reduce it. Its deal with Brookfield is also being reworked following termination of wireless merger talks with Aircel. Besides, there are reports that Tata Group may shut down Tata Teleservices which is also under a debt of Rs 31,000 crore.

As per a Goldman Sachs report, calling off of the deal with Aircel and given its high debt levels, RCom will find it increasingly difficult to compete in the wireless market amid rising competition from new entrants and established players.

Bharti Airtel and Reliance Jio have been fairly aggressive in subscriber acquisition recently, Goldman Sachs said. Both the firms will continue to benefit from consolidation at the tail end of the market.

On Tata Teleservices, it said that despite valuable spectrum held by the Tata Group company, there may be a few takers for the radiowaves. This is because all incumbent telcos have enough spectrum to take care of their data demand needs for next 3-5 years. "Given high debt levels in the sector, telcos may choose not to acquire any new spectrum in near future," the report said.

But it did not completely rule out the possibility of Bharti Airtel and Reliance Jio selectively acquiring spectrum in a few circles. At the last auction-determined prices, Tata's spectrum is worth USD 2.4 billion, the report by Goldman Sachs added. – DNA